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Scottish Government proposes £1 billion oil fund

Guest writer Jamie Mckenzie investigates how establishing a Scottish ‘oil fund’ through independence could work with a re-industrialised green energy sector.

Scottish First Minister, Alex Salmond, has claimed he could set aside £1 billion a year in oil and gas revenues over the next twenty years in an independent Scotland, despite sharp criticism from leading economists.

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Guest writer Jamie Mckenzie investigates how establishing a Scottish ‘oil fund’ through independence could work with a re-industrialised green energy sector.

Scottish First Minister, Alex Salmond, has claimed he could set aside £1 billion a year in oil and gas revenues over the next twenty years in an independent Scotland, despite sharp criticism from leading economists.

In a speech at the London School of Economics on Wednesday, Feb 15, Mr Salmond argued that the new investment vessel could yield £30 billion worth of oil revenue savings for Scotland by 2035.

The model mimics Norway’s Government Pension Fund Global –a fund devised in 1990 as a fiscal policy tool to buttress long term savings from the country’s extensive oil revenue. It is now worth £330 billion.

Salmond highlighted the economic use of an oil and gas fund for Scotland by saying, “Revenues could be invested, rather than spent on current expenditure, during good financial times, and could counteract the effects of economic downturns.”

In an independent Scotland, establishing an oil fund would, as contradictory as it may sound,  work alongside the SNP’s drive to make renewable energy central to ‘re-industrialisation’ and meet its current target of generating 100% gross annual electricity consumption from renewable energy by 2020.

Indeed, establishing a re-industrialised green economy was highlighted by Salmond as one of the country’s six practical ways to boost economic growth and jobs through independence, while alleviating future dependency on oil.

A sovereign wealth fund backed by oil cash savings would buffer Scotland against future economic storms, giving a future sustainable economy added financial stability. So, when the oil runs out, Scotland’s future generations could reap the reward from a large sovereign wealth fund while profiting from a clean energy export economy.

Citing research from the think-tank Reform Scotland, Salmond summarised the idea by saying, “Reform Scotland estimates that as a result of our renewable electricity target, Scotland would export half the electricity generated by 2020, increasing Scottish exports by £2 billion a year – equivalent to around 17% of Scottish manufacturing exports to the rest of the UK.

And while renewables will be the source of Scotland’s re-industrialisation, in value terms there is at least as much oil and gas still to come out as has already been used – at least 40 years of oil and gas reserves. We still have an opportunity to establish an energy fund.”

But the plan to establish an oil and gas fund has its critics.

Economic analysts argue that the country would either need oil tax revenues to pay for schools, hospitals and public services, or help towards the burden share of UK national debt accumulated by Scotland post secession.

Professor John McLaren, from Glasgow University’s Centre for Public Policy and the Regions (CPPR), said, “The country has a £20 billion deficit without oil. Why would you set up an oil fund when you are massively in debt?

Political opponents to Salmond’s claims include Labour finance spokesman Ken Macintosh, who said, “Basing our entire economy on a single commodity that is volatile in price and finite in supply is a step backwards for Scotland.”

If the fund was established, the SNP leader may need to clarify the cuts he would need to make elsewhere to combat the budget deficit. But Mr Macintosh overlooks the point that the economy would not be based solely on this “single commodity”.

The SNP has repeatedly made clear their ambition to meet future climate change targets and has emphasised that, through independence, they would have more control over Scotland’s renewable energy resources and more borrowing power to stimulate capital investment in to the green energy sector.

The oil fund would be an economically viable option given that Scotland still possesses an abundance of oil and gas reserves – but it would only work alongside a re-industrialised green economy.

As Salmond makes clear, Scotland is currently a frontrunner in the shift away from fossil-fuel consumption towards a green energy economy, stating, “We have 25% of Europe’s tidal power potential, 25% of its offshore wind potential and 10% of its wave power potential – not bad for a nation with less than 1% of Europe’s population.”

With this resource capacity, there is big appetite for funding growth and creating jobs in the marine and offshore wind sectors.

Blue & Green Tomorrow has previously identified some of the ways in which this appetite is being fed. Marine energy funds like WATERS 2 have boosted Scotland’s renewables revolution through financing research and development to further develop testing of new wave and tidal prototypes in the seas around Scotland.

And from the jobs perspective, government-led initiatives like the Low Carbon Skills Fund have been supporting the sustainable growth of Scotland’s low-carbon businesses by up-skilling and re-skilling employees to make clean energy production more cost-effective.

Green energy funding is already shaping the future of Scotland by allowing Scottish developers and supply chain companies to capture a bigger share of the growing UK, European and global marine energy and offshore wind energy markets.

Under independence, the SNP could use some of the savings in an established oil and gas fund to further invest in research and development that would improve the cost-effectiveness of technologies used in those critical industries.

In a speech peppered with refrains that independence was paramount to sustainable economic opportunity, an oil fund might seem like a strange suggestion – but perhaps if some critics looked at how it would fit in alongside and ultimately help finance a re-industrialised low carbon economy – then it can be viewed in a much better light.

Whatever Scotland decides to do with its oil and gas revenue, the positive drive towards renewable energy will benefit us all. If you’re interested in becoming a 100% renewable energy user, visit Good Energy, the UK’s only 100% renewable energy provider.

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New wave of funding for marine energy sector

Trumped-up complaints about offshore wind farm

Picture source: SNP

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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